Section 3 - Ch1

Question 1

Treasury Warrant (and ID code)

Answer 1

Treasury Warrant: agencies cannot begin spending appropriations until the Treasury Dept issues a Treasury Warrant. Signifies the account has been established and identifies the coding to be used for agencies.

• Identification Code:
  
  • Agency Code:2 digit code
  • Period of Appropriation:1 or 2 digit code (annual = 1; all on year appropriations for 2004 have a code of “4”)
  • Account Symbol:4 digit code that identifies the fund

Question 2

US Consitution (sec. 8, sec. 9)

Answer 2

• all spending must derive from apportionments.
• Also gives Congress the ability to borrow money on the credit of the U.S and establishes a “public debt limit”.
• Requires enactment of appropriations before money can be spent and requires regular reporting on receipts/expenditures.

Question 3

Anti-Deficiency Act

Answer 3

• Anti-Deficiency Act: prevents spending or obligations in advance of the FY. Purpose Time and Amount
  
  • Agencies may NOT:
    
    • Make purchases before appropriations are enacted and accounts are apportioned
    • Enter into contracts that exceed the appropriation or amount apportioned by OMB
    • Accept volunteer services or Pay bills when there is no balance available

Question 4

Supplemental Appropriations Act of 1950

Answer 4

• Supplemental Appropriations Act of 1950: defines a legal obligation and requires unobligated appropriations to be reported at the end of the year.

Question 5

Congressional Budget and Impoundment Control Act of 1974

Answer 5

• Congressional Budget and Impoundment Control Act of 1974: established budget committees and the Congressional Budget Office (CBO) to reestimate the president’s budget.
  
  • the president cannot simply decline to spend (or impound) appropriations. The president may propose deferrals or rescissions.
  • The Act also changed the fiscal year of the federal government from July 1-June 30 to Oct. 1-Sept. 30, starting in 1976.

Question 6

Budget Enforcement Act of 1990

Answer 6

Budget Enforcement Act of 1990: passed to try to control spending due to mounting deficit. Divided spending into discretionary and mandatory. Established “caps” for discretionary spending.

Question 7

Federal Credit Reform Act of 1990 (TEST)

Answer 7

Federal Credit Reform Act of 1990 (TEST): governs federal credit programs making direct loans and loan guarantees. Congress must provide budget authority equal to subsidy cost in annual appropriations acts before making direct loans and loan guarantees.

• Direct Loans:must be recognized as assets at the PV of net cash inflows. Difference between outstanding principal and PV of net cash inflows is recognized as subsidy cost allowance.
• Guaranteed Loans: recognized as a liability in the amount of the PV of cash outflows of the loan guarantees.

Question 8

Government Performance and Results Act of 1993

Answer 8

Government Performance and Results Act of 1993: Emphasizes managing for results. Requires agencies to prepare strategic plans, annual performance reports.

Question 9

Types of Budget Authority

Answer 9

Budget Authority:

• Appropriations
• Borrowing Authority (Authority to borrow)
• Contract authority
• Spending authority from offsetting collections

Question 10

Lifecycle of an Appropriation

Answer 10

Life Cycle of an Appropriation:

1. Current Period
2. Expired Period:when it cannot be used anymore
3. Closed Period: after 5 years no obligations can be made or spent… open obligations are cancelled.

Question 11

To Establish Spending (2 step process)

Answer 11

Key Budget Terminology

To Establish Spending (2 step process):

1. Authorization: Congress sets the requirements for authorization (congress may skip this step if necessary)
2. Appropriation: Congress must appropriate funds. Once appropriated, the ability to spend appropriated funds depends on 3 things:
   
   • of the obligation and expenditure must be “consistent with the appropriation”.
     
     • Look to its appropriation and legislative history
   • : The obligation (not the expenditure) must occur within “time limits” set by appropriation.
     
     • One year or multi-year or no-year specified
   • The obligation and expenditure must be within the “amounts” Congress established.
     
     • Most are definite appropriations and some are indefinite

Question 12

Discretionary and Mandatory

Answer 12

Mandatory Spending: spending programs subject to permanent law.

Discretionary Spending: 1/3 annual spending; controlled by annual appropriations acts.

Question 13

Reconciliation Process:

Answer 13

Congress implements constraints on spending. Two Step process.

• first step: language found in a concurrent resolution on the budget instructing House and Senate committees to determine, and recommend, changes in laws or bills that will achieve the constraints established in the concurrent resolution on the budget.
  
  • The instructions to a committee specify the amount of spending reductions or revenue changes a committee must attain, and leave to the discretion of the committee the specific changes to laws or bills that must be made.
• Second step involves the combination of the various instructed committees’ recommendations into an omnibus reconciliation bill. Once an omnibus reconciliation bill has been passed by both the House and the Senate, it is sent to Pres for approval
  
  • called reconciliation bill (not omnibus) if only a few committee appropriations are included

Question 14

Budget Execution

Answer 14

1. Budget execution: (Temporary Law)
   
   • Government agencies cannot spend more than Congress has appropriated
   • : Issued by Treasury Department which indicate amount appropriated for spending and is tracked by the Treasury.
   • Anti-Deficiency Act:prohibits agencies from spending or obligating the government to spend in advance of an appropriation. Requires the President to “apportion” the budgetary resources available for most executive branch agencies (delegated to OMB as authority). OMB requires spending plans from agencies and apportions funds by quarter.
   • Deferrals: if spending amount given is not needed or able to be used, temporary withholdings are recommended by the President and Congress must approve. President may NOT defer funds for policy reasons.
   • Rescissions: permanently cancel budget authority, take effect if Congress passes a law to approve. If Congress does not pass a law within 45 days, the President must make funds available for spending.

Question 15

Deferrals and Rescissions

Answer 15

Deferrals: if spending amount given is not needed or able to be used, temporary withholdings are recommended by the President and Congress must approve. President may NOT defer funds for policy reasons.

Rescissions: permanently cancel budget authority, take effect if Congress passes a law to approve. If Congress does not pass a law within 45 days, the President must make funds available for spending.

Question 16

Apportionments

Answer 16

Apportionments: a plan, approved by the OMB, to spend budget resources by law. Purpose is to prevent agencies from obligating funds that would require supplementary appropriations and to achieve the most economical use of amounts made available.

Question 17

Budget Process (Quiz Notes)

Answer 17

Budget process:

• Agency drafts budget>
• OMB consults w/ agencies and submits President’s budget>
• Congress prepares individual appropriation bills.
  
  • President’s budget is not approved or rejected by Congress.

Question 18

Government Performance and Results Act Modernization Act of 2010 (GPRAMA)

Answer 18

GPRAMA

• establishes a new framework aimed at taking a more crosscutting and integrated approach to focusing on results and improving government performance.
• It requires the OMB, in coordination with agencies, to develop—every 4 years—long-term, outcome-oriented goals for a limited number of crosscutting policy areas.
• On an annual basis, OMB is to provide information on how these long-term crosscutting goals will be achieved.

Question 19

Object Class

Answer 19

Object Class: categories used in budget preparation to classify obligations by the items or services purchased by the federal government. The major object classes and their corresponding numbers are:

• 10 – Personnel compensation and benefits
• 20 – Contractual services and supplies
• 30 – Acquisition of assets
• 40 – Grants and fixed charges
• 90 – Other

Use of these object classes allows for presentation of obligations according to their initial purpose, rather than the result or service. For example, the wage obligations of a federal employee who is paid to construct a building are classified as “Personnel compensation and benefits,” but the contractual obligations for the purchase of a building are classified as “Acquisition of assets.”

Object class information is mandated by law (31 U.S.C. § 1104(b)), which requires the President’s Budget to present obligations by object class for each budgetary account. Object classes are subdivided into smaller classes, such as military or civilian personnel compensation and benefits.

Question 20

Budget Process (Phases)

Answer 20

*Budget Process Phases – planning begins 18 months before the FY begins.

1. Formulation of the President’s budget:budget covers at least 4 years following the budget year.
   
   • OMB works with federal agencies to establish planning level
   • President, OMB, and officials of the Executive Office of the President involved
   • Key Assumptions: GDP growth, shares of wages and salaries in GDP, Inflation, Unemployment Rate, Interest Rates, number of people eligible for various benefits.
   • Must consider: resource needs of programs, priorities, outlays and receipts appropriate with economic conditions, any constraints in force.
   • President must sent proposed budget to Congress NLT first Monday in February. Gives Congress 8 to 9 months to act on the budget before start of FY on October 1.
2. Congressional action on the budget:Congress must act to provide authority for agencies to spend money
   
   • Can add/eliminate programs or taxes submitted by President.
   • Congress does NOT enact the budget — must agree on total spending levels before individual appropriations bills can be completed.
   • Congressional Actions in Providing Budget Authority:
     
     • Budget Resolution:not a public law, but a concurrent resolution agreed upon by both the House and Senate that sets limits for total receipts and budget outlays both in total and by “functional category”. Congress votes on “budget authority” which will result in outlays, but not outlays directly.
     • Authorizing Legislation
     • Appropriations Bills:Start in the “House”. House votes on bills from subcommittees prior to submitting them to the Senate for approval.
     • Conference Committees:formed if the Senate disagrees with the House on matters in appropriations bills. When approved by both the House, first, then Senate à send to Pres.
     • Presidential Approval:President can only approve or veto an “entire bill”.
     • Continuing Resolution:If all bills are not enacted by the FY beginning, CR is enacted. If the President disagrees with CR, the government will “shut down”.

Mandatory Spending: spending programs subject to permanent law.

Discretionary Spending: 1/3 annual spending; controlled by annual appropriations acts.

Reconciliation Process: Congress implements constraints on spending. Two Step process.

1. Budget execution: (Temporary Law)
   
   • Government agencies cannot spend more than Congress has appropriated
   • : Issued by Treasury Department which indicate amount appropriated for spending and is tracked by the Treasury.
   • Anti-Deficiency Act:prohibits agencies from spending or obligating the government to spend in advance of an appropriation. Requires the President to “apportion” the budgetary resources available for most executive branch agencies (delegated to OMB as authority). OMB requires spending plans from agencies and apportions funds by quarter.
   • if spending amount given is not needed or able to be used, temporary withholdings are recommended by the President and Congress must approve. President may NOT defer funds for policy reasons.
   • permanently cancel budget authority, take effect if Congress passes a law to approve. If Congress does not pass a law within 45 days, the President must make funds available for spending.

Question 21

Key Budget Terminology

Answer 21

*Key Budget Terminology

To Establish Spending (2 step process):

1. Authoriztion: Congress sets the requirements for authorization (congress may skip this step if necessary)
2. Appropriation: Congress must appropriate funds. Once appropriated, the ability to spend appropriated funds depends on 3 things:
   
   • Purpose of the obligation and expenditure must be “consistent with the appropriation”.
     
     • Look to its appropriation and legislative history
   • Time: The obligation (not the expenditure) must occur within “time limits” set by appropriation.
     
     • One year or multi-year or no-year specified
   • Amount: The obligation and expenditure must be within the “amounts” Congress established.
     
     • Most are definite appropriations and some are indefinite

Life Cycle of an Appropriation:

1. Current Period
2. Expired Period:when it cannot be used anymore
3. Closed Period: after 5 years no obligations can be made or spent… open obligations are cancelled.

Budget Authority:

• Appropriations
• Authority to borrow
• Contract authority
• Spending authority from offsetting collections

Treasury Warrant: agencies cannot begin spending appropriations until the Treasury Dept issues a Treasury Warrant. Signifies the account has been established and identifies the coding to be used for agencies.

• Identification Code:
  
  • Agency Code:2 digit code
  • Period of Appropriation:1 or 2 digit code (annual = 1; all on year appropriations for 2004 have a code of “4”)
  • Account Symbol:4 digit code that identifies the fund

Apportionments: a plan, approved by the OMB, to spend budget resources by law. Purpose is to prevent agencies from obligating funds that would require supplementary appropriations and to achieve the most economical use of amounts made available.